Gold sold by Norway was long gone; Australia admits gold is for rigging markets

Section:

http://biz.yahoo.com/rf/040130/markets_forex_intervention_2.html

TOKYO, Jan. 30 (Reuters) -- Japan spent a record 7.1545 trillion
yen in currency intervention in January -- equivalent to $67.56
billion at Friday's rate -- to stem the yen's rise against the
dollar, Finance Ministry data showed.

That total, which covers the period between December 27 and
January 28, compares with the previous monthly record of
4.4573 trillion yen last September. The Japanese authorities
spent an annual record of 20 trillion in 2003.

The dollar eased to around 105.70 yen, the day's low, after
the announcement from 105.80 yen just before.

"I think the figure was within expectations but it looks like
other people thought 'they spent this much and still couldn't
stop the yen's rise?,' as the dollar is now being sold," said
Kenji Kobayashi, senior manager for foreign exchange at
Bank of Tokyo-Mitsubishi.

The MOF has continued to maintain a strong presence in
the market this year, aggressively intervening during the
first trading week from January 5, sending the dollar up by
two yen at one point on January 9.

Despite this heavy intervention, the dollar fell to a
three-year low of 105.45 yen on Tuesday on speculation
that Japan may row back on its efforts to hold down its
currency to avoid criticism at a Group of Seven meeting
next week.

Japanese officials could come under fire from their European
counterparts, who are worried that the euro might be left to
bear the brunt of the dollar's fall, which could hurt European
exports, traders say.

The dollar fell more than 15 percent against the euro last year
and has continued to slip in 2004, hitting a record low of
$1.2898 per euro on January 12.

In comparison, the U.S. currency sank 10 percent against the
yen in 2003, falling to 107 yen from near 119.

The BOJ was suspected of intervening on Wednesday, briefly
boosting the dollar by more than one yen in an apparent effort
to convince the market that it was not easing back on
intervention ahead of the G7.

The MOF also said it sold 5.014 trillion yen ($47.35 billion) of
foreign bonds to the Bank of Japan to raise intervention funds
through a repo deal, under which it would buy the paper back
at a later date.

After its aggressive intervention last year, market players had
speculated that the government could hit the limit imposed by
parliament for its foreign exchange special account, from
which it draws the funds for intervention.

To squash such speculation, the MOF said last year it would
raise the borrowing limit and also arranged the repo with the
BOJ as a stopgap measure.

Later on Friday the Lower House of parliament is expected to
pass an extra budget for the current fiscal year which would
raise the limit to 100 trillion yen from 79 trillion yen.

For the next fiscal year starting in April, the ministry has
said it would raise the borrowing limit further to 140 trillion yen.

The total increase of 61 trillion yen roughly matches the annual
U.S. current account deficit.

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